Groupon (NASDAQ:GRPN) will step into the earnings spotlight after the close this afternoon, and the daily deals website operator finds itself under considerable pressure to put up a solid quarter. Excessive valuation, a handful of sour deals, and an intrusive email campaign turned off investors and Groupon customers alike last year, sending GRPN shares plunging some 78% since the company’s initial public offering.

But the company is working on turning things around, with Groupon pushing its new suite of small-business services, including a mobile payments app. Overall, analysts are forecasting that Groupon’s fourth-quarter earnings rose to 3 cents a share from a loss of 2 cents in the same period last year.

Taking a closer look at the brokerage community, we find that while pessimism rules the roost on GRPN, some analysts are starting to have a change of heart. According to data from Thomson/First Call, GRPN has attracted just three Buys, compared to 22 ratings of Hold or worse. But an analyst at Stern Agee recently upgraded GRPN to Buy, noting that “many of the risks are well known and priced in and we see a few early signs of a turnaround.”

While a turnaround would surprise quite a few analysts, the short-selling community would be caught completely flat-footed. Despite short interest declining by about 2% during the most recent reporting period, some 36.7 million GRPN shares are still sold short — a sizable 19.4% of the stock’s total float (or shares available for public trading), creating a potential short-squeeze situation if Groupon shows signs of recovery.

The stock has already more than doubled since bottoming near $2.50 in November. Throughout this rally, GRPN has enjoyed the support of its 10-day and 20-day moving averages. The shares are consolidating into support near $5.50 as they gear up for another run at resistance near $6.

Checking in with options activity, weekly March implied volatility indicates that traders are expecting a post-earnings move of about 15% for GRPN. While a short-squeeze is a definite concern, Groupon has a track record of disappointing investors. As such, buying an April 5/5.50 bear put spread could be a lucrative play.

At the close on Tuesday, this spread was asked at 27 cents, or $27 per pair of contracts. As a result, breakeven rests at $5.23 — a decline of about 6% from yesterday’s close. Finally, a maximum profit of 23 cents, or $23 per pair of contracts, is possible if GRPN closes at or below $5 when April options expire.